Car Buying: Financial Question

"Poor_Sh" (ar4x) 01/21/2018 at 13:02 • Filed to: car buying advice

0

20

My current car, if you didn’t know:

Background: I have about 7 months and around $3500 left to payoff my car. I’m planning to upgrade though, and I’m looking at sports cars. So, I’ve been thinking about upgrading in less than 7 months so I have all of summer with the new car rather than just August-November (assumed).

So here’s the question: Should I pay off my mustang early, trade it in with a balance, or just wait until it’s paid off at the normal pace and just have less fun time with the new car?

I have the money to pay it off, but I’m also planning to put some money down on the next vehicle. I don’t know if the difference in trade-in value will be significant if I get rid of the mustang a few months earlier so that may not matter. My other issue, is that if I get the new (to me) car close to winter, I’ll have to quickly get new snow tires (and maybe a second set of wheels) for that car and swap it over within a few months. Keep in mind, I don’t actually know which car I’m getting yet but I can certainly make that decision in a month or a few.

So, what would you guys do? Am I just being too impatient?

The Crazy Kanuck; RIP Oppositelock > Poor_Sh 01/21/2018 at 13:26

6

I would highly recommend trading right now for a manual Juke. 

CompactLuxuryFan > Poor_Sh 01/21/2018 at 13:42

0

If you’re definitely not gonna keep the Mustang for a significant amount of time after you pay it off then I don’t think it matters.

Poor_Sh > The Crazy Kanuck; RIP Oppositelock 01/21/2018 at 13:43

1

Woah there, I’m looking at sports cars. I couldn’t possibly handle a Juke yet!

BrianGriffin thinks “reliable” is just a state of mind > Poor_Sh 01/21/2018 at 13:43

2

Pay it off now. At the very least, that’ll be less money at the bottom line of the new car deal, which means less in taxes. Also makes it easier to sell private party if that idea should appeal to you later on.

E90M3 > Poor_Sh 01/21/2018 at 13:47

1

I don’t really think it matters, since you’re planning on getting a new car regardless. This means it’ll all equal out in the end. Now if you were thinking about keeping it versus getting something else, this would be different.

Poor_Sh > E90M3 01/21/2018 at 14:13

0

Makes sense. Most people give the argument of keeping the cash vs. paying out over time being a lost value in interest or investment. However, this amount over this time frame won’t be more than a lost of like $50 in interest/dividends.

Poor_Sh > BrianGriffin thinks “reliable” is just a state of mind 01/21/2018 at 14:14

1

I definitely agree on easier for possible private party sale. But admittedly, doing so scares me haha I prefer to just trade it in, take the hit, and not have to deal with people. Ugh. People.

E90M3 > Poor_Sh 01/21/2018 at 14:26

0

Right, $50 in the grand scheme isn’t much. Plus, it sounds like you would be getting another loan anyways, so you’ll be paying interest either way.

nermal > Poor_Sh 01/21/2018 at 14:37

1

Are you looking at something new or used for the new one? How long do you plan on keeping the new one?

Your existing car will only drop in value over time. Used cars that you are looking to purchase will generally do the same, so those two factors will generally offset if you wait. You will have the remaining interest on your loan, but with the last 7 months of the loan that shouldn’t be much.

If you’re planning on getting new, generally the best deals are towards the end of the model year. At the same time, you’re buying a car that’s already a year old. If you plan on keeping long term, buy at the end of the model year to save $$$. If you’re planning on keeping short term, buy at the beginning of the model year to get more $$$ back when you sell / trade.

Are you going to let your personal finances adjust which car to get, or are you going to adjust your personal finances to get the car you want? If the first, just buy a 2-3 year old Camry or Accord - They’re always the prudent financial decision. Otherwise pick the car you want first, then figure out if / how it fits your budget.

dsigned001 - O.R.C. hunter > Poor_Sh 01/21/2018 at 14:43

0

This is a tough one for me, because I’ve got little monkeys and not having a car payment is something I cherish. So I suppose the big question is: what are you hoping for in a new car?

Poor_Sh > nermal 01/21/2018 at 14:45

0

Great answer!

I’m looking at a used C7 Stingray, Porsche 981 Cayman S, or BMW M2. So end of model-year timing probably doesn’t come into play, though the summer/winter sports car effect may. I plan on keeping the next car long term, 5+ years.

As to finances, they’re already set to afford the cars I’m looking at without much worry. Certainly it’s more financially sound to keep my current car, or buy a cheap reliable car as you mentioned, but that’s not the case. This is an expensive, hobby/happiness purchase that I’ve planned for.

Thanks!

Poor_Sh > dsigned001 - O.R.C. hunter 01/21/2018 at 14:47

0

1) A big change to my life in the positive. 2) Better seats (my current ones hurt my back). 3) Something smaller, more driver-centric, and special.

And yes, I’m single, no kids, good job, and willing to look like a rich douche if that’s the image I’ll be painted with.

nermal > Poor_Sh 01/21/2018 at 14:51

1

You’ve pretty much answered your question then - This is a want-based purchase (that you can afford), not a need-based one. Since you’re shopping used, you’re at the mercy of what’s available for sale and don’t have the luxury of ordering new exactly the way you want.

So, start shopping now, and when you find the car you want, buy it.

Poor_Sh > nermal 01/21/2018 at 15:00

0

Makes sense. It does seem like the financials either don’t matter or even out. It’s basically just a couple grand that I either lose all at once, or over a few months. The former gives more happiness over the time than the latter takes. Sometimes I just need to bounce ideas off of people.

dsigned001 - O.R.C. hunter > Poor_Sh 01/21/2018 at 16:30

0

Appearances are really just that. Unless you drive a bro truck then fuck you (kidding: our two best couple friends both have huge extended cab pickups).

Interesting point about the seats. The one thing I don’t like about my current car (other than it’s not turbo, AWD or brown) is that it’s a lot louder than I’d like, and since I commute an hour each way, it’s kind of a pain.

Eury - AFRICA TWIN!!!!!!! > Poor_Sh 01/21/2018 at 16:40

0

Are you going to be financing the new car? Interest rates are going up this year. Get it now and get a lower rate.

Poor_Sh > dsigned001 - O.R.C. hunter 01/21/2018 at 17:34

0

Haha yeah I don’t mind it, but everyone I talk to tells me how it’s going to make me look. Big deal.

Do you mean loud like exhaust or just general road noise? Because I’m one of them assholes who likes a loud exhaust even just driving to work.

Poor_Sh > Eury - AFRICA TWIN!!!!!!! 01/21/2018 at 17:36

0

My current loan is 1.9% I wish I could leverage that somehow into my next one.

Textured Soy Protein > Poor_Sh 01/21/2018 at 18:00

0

Assuming the car is worth more than you owe on it there’s nothing to stop you from getting a different car now.

Poor_Sh > Textured Soy Protein 01/21/2018 at 18:21

0

Yeah, best estimates puts me at about $16k in the positive for a trade-in.